NASHVILLE, Tenn. — Traditional paths to market for U.S. and Canadian wheat could change come Aug. 1 when Canada switches to an open market.
Mark Hemmes, president of Quorum Corp., which is the monitor for the Canadian prairie grain handling and transportation system, said Canadian grain will be using U.S. ports and vice versa.
“There’s a lot of people who believe we’ll see a transition to a continental market as opposed to a U.S. and Canadian market, and that’s a good thing because what it provides is sales opportunities for producers,” he said.
Alan Tracy, president of U.S. Wheat Associates, said American wheat farmers will definitely be eyeing Canada’s transportation system, especially the west coast ports.
“We’re going to be interested in what happens to your rail freight subsidy and whether it might be possible for U.S. wheat occasionally to use your westward movement,” he said during an interview at the 2012 Commodity Classic conference.
“It may create a little more competition in the rail freight, which I think would be a good thing.”
Wade Sobkowich, executive director of the Western Grain Elevator Association, envisions more action the other way.
“I have a suspicion that we’re going to see more Canadian grain going south (for export) than U.S. grain coming north,” he said.
Sobkowich said U.S. grain that is shipped directly to Vancouver or Prince Rupert shouldn’t affect freight rates. The revenue cap is for Canadian grain movement and there will still be an incentive for the railways to operate as close to the cap as possible. But U.S. grain that stops at a Canadian country elevator for processing and is then reloaded onto rail cars will become part of the revenue cap equation.
Canadian shippers could also see an impact on rail service if Sobkowich is wrong and more U.S. wheat comes north than Canadian wheat heading south.